Nominal bonds yields turn negative

The ten year Bund yield fell by about 30bp in July, almost fully reversing the rise seen in June. The decrease reflected a fresh intra-euro-zone “flight-to-safety” as ten year government bond yields in Spain, Italy and Portugal all ended the month higher after their sharp falls in the prior month. Perhaps more interestingly, the euro-zone crisis appeared to be a factor in driving nominal bond yields at the short end of the German curve below zero.